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Al Mazaya Report: Private sector leading Gulf healthcare sector towards world-class development

 

Healthcare sector abounds in promising opportunities; medical & pharmaceuticals sectors primary beneficiaries

 

Saudi Arabia set to invest $71 billion in healthcare projects until late 2020

The Gulf healthcare sector has secured qualitative leaps over the past few years, driven by government support and ambitious plans by the private sector to contribute to the development of this key and promising sector, and benefit from the growing demand for quality and competitive services.

The weekly report of Al Mazaya Holding Company said that the Gulf economies have succeeded in bringing about fundamental changes in the mechanisms and tools of the healthcare sector, starting from developing and rehabilitating its infrastructure in line with the ongoing economic growth and diversification plans, embracing modern technologies, and forging partnerships and alliances with health institutions and government agencies, especially at the global level.

These efforts have fructified in reducing treatment costs and effected a gradual shift towards local treatment, dissuading people from travelling overseas for treatment. They also have led to continual successes in drawing FDIs to the healthcare sector in the Gulf countries, and to an increase in the number of people coming for treatment from abroad.

Al Mazaya report highlighted the heightened competition within this sector at the local and international levels, which poses more challenges and at the same time pushes for fundamental adjustments to ensure a sustainable investment focus on the areas that are most in-demand, as well as continuous work to keep up with medical and treatment developments by providing and developing healthcare facilities in accordance with the highest international standard. This development, in turn, will provide the real estate sector with valuable growth prospects.

The Al Mazaya report emphasised the Gulf region’s enabling healthcare infrastructure and resilient legislation, noting the private sector is playing an evolving role in developing the sector. The upcoming stage, says the report, requires specific investments that rely on modern technologies and qualitative scientific applications through global partnerships that ensure real and tangible progress.

“Looking at the health sector in the Kingdom of Saudi Arabia, we find that the value of government-led projects, plans and investment opportunities will exceed the $71 billion barrier until the end of the year 2020, with the healthcare sector expected to record growth rates of 12%, driven by population growth and an increase in the age group 60 years+, in addition to the compulsory health insurance scheme,” said the report.

The Kingdom aims to raise the private sector’s contribution to total healthcare spending to 35% by 2020 and to increase the sector’s contribution to GDP from 40% to 65% in 2030. Accordingly, the Kingdom has allocated 15.6% of the 2019 budget to the healthcare sector, with a value of SAR 172 billion, through the development of more ambitious plans to privatise a large number of hospitals and health centres by 2030.

The Mazaya report touched on the healthcare sector in the United Arab Emirates, describing it as integrated, comprehensive and well-equipped, with an advanced infrastructure at the level of both primary healthcare first and medical tourism second, in light of the diversity of its services and high potential to compete regionally and globally.

The report continued by saying that the UAE healthcare sector draws its strength from a massive government budget of AED4.4 billion, with the country witnessing an annual spending growth of increase 8.8%, which will reportedly reach $2.4 billion by the year 2025. The report added that the readiness of the UAE healthcare sector has contributed to rapid development in medical tourism, with the country now ranked among the world’s top 20 destinations for medical treatment.

Within this context, Al Mazaya report highlighted the significant investment opportunities the pharmaceuticals market abounds in the Gulf countries at a time import costs are spiralling. The volume of the pharmaceutical market in the United Arab Emirates will rise to $4.54 billion by 2021, with an annual growth rate of 5.8%. In Saudi Arabia, it’s set to reach $10.74 billion by 2022. This comes at a time when the Kingdom is seeking to grow the local manufacturing share in the pharmaceutical sector to 40% by 2020.

The report stressed that population growth and increasing demand for healthcare services require more investments to accelerate local manufacturing of medicines, which is a feasible investment opportunity for private sector companies.

Al Mazaya expects more successes to be made by the healthcare sector in the Gulf countries over the next few years, in light of the growing demand for private healthcare services which will spur qualitative internal and external investments.